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In a comment in a previous question, someone mentioned that

in late 2017 AWS changed the spot pricing algorithm to substantially reduce volatility. Spot prices do signal demand but the demand signals have been dampened to the point that they no longer clearly signal capacity

That's in line with my experience. Whereas prices used to spike as supply diminished, that no longer happens. Instead spot instances are terminated with the following reason: instance-terminated-no-capacity.

I feel I no longer understand how spot pricing works and I find my machines keep getting terminated due to supply reasons (rather than price/bid like they did in the past).

Can anyone explain the current algorithm used to determine spot instance pricing and availability? I'm just looking for a high-level explanation so I can come up with bidding/provisioning strategies that make sense post 2017.

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    Wow, people seem to hate this question. If you downvote this question, can you also leave a comment on what's wrong with it?
    – conradlee
    Oct 26, 2018 at 13:45
  • No idea why are your questions being downvoted - they look perfectly fine to me. Anyway, I guess the instance-terminated-no-capacity simply means there is no capacity at your bid price. If the message used to be different they may have changed the message. I usually bid slightly above on-demand prices and seldom get my instances terminated.
    – MLu
    Oct 26, 2018 at 22:38
  • @MLu yeah the first time I saw the error I thought the same thing: I've been out bid. But I investigated and figured out that's not the case. The price of the ec2 spot market usually stays stable when you see this error, and is always below my bid price. There's a different message you get when you get outbid. This all doesn't make sense to me, hence this question.
    – conradlee
    Oct 29, 2018 at 7:44

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No technical details have been publicly provided.

As part of today’s launch we are also changing the way that Spot prices change, moving to a model where prices adjust more gradually, based on longer-term trends in supply and demand.

https://aws.amazon.com/blogs/aws/amazon-ec2-update-streamlined-access-to-spot-capacity-smooth-price-changes-instance-hibernation/

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